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Issue Date: Vol. 54, No. 2, February 2014, Posted On: 1/16/2014


CEC Entertainment Inc. Adopts Shareholder Rights Plan


CEC Press Release
TAGS: Chuck E. Cheese's, Board of Directors of CEC Entertainment Inc., CEC shareholder rights plan, Apollo Global Management LLC

PRESS RELEASE

Source: CEC Entertainment Inc. | Released Jan. 16, 2014

IRVING, Texas -- (BUSINESS WIRE) -- Jan. 16, 2014 -- The Board of Directors of CEC Entertainment Inc. (NYSE: CEC) ("CEC") today announced that it has adopted a shareholder rights plan (the "Plan").

Pursuant to the Plan, the Board of Directors declared a dividend of one preferred stock purchase right (each a "Right" and collectively, the "Rights") on each outstanding share of the Company's common stock as of Jan. 26, 2014, (the "Record Date"). Each Right, once exercisable, will entitle shareholders to buy one ten-thousandth of a share of a new series of junior participating preferred stock at a purchase price of $54 per Right, subject to adjustment.

The Plan is designed to assist the Board of Directors in overseeing a fair and orderly process and to maximize shareholder value in connection with a sale of the Company. The Plan will not in any way prevent or restrict any person from making a superior proposal pursuant to the terms of the Merger Agreement entered into with affiliates of Apollo Global Management LLC ("Apollo") on Jan. 15, 2014.

The Rights will be exercisable only if a person or group of affiliated or associated persons (other than Apollo or any of its affiliates or associates acting pursuant to the Merger Agreement) (an "Acquiring Person") acquires beneficial ownership of 10% or more of the Company's common stock. The Plan provides that the ownership of shareholders that beneficially own 10% or more of our common stock on the date of adoption of the Plan will be grandfathered, but the Rights would become exercisable if at any time any such shareholder increases it ownership percentage by 0.001% or more. Derivative interests in our common stock, such as swap arrangements, regardless of whether such arrangements carry with them the right to control voting or disposition of the underlying securities, are also considered beneficial ownership of the underlying common stock for purposes of the Plan. The Plan permits the acquisition of control of CEC by Apollo or one of its affiliates pursuant to the terms and conditions of the Merger Agreement, in connection with which the Plan was adopted.

If an Acquiring Person acquires 10% or more of the Company's outstanding common stock, the Rights will generally entitle the Company's shareholders, other than the Acquiring Person and its affiliates, the opportunity to purchase, at the exercise price of the Right, such number of shares of CEC common stock having a current value of twice the exercise price of the Right. In addition, if the Company is acquired in a merger or other business combination transaction after an Acquiring Person acquires 10% or more of the Company's outstanding common stock, the Rights would generally entitle its holders, other than such Acquiring Person, the opportunity to purchase, at the exercise price of the Right, such number of shares of the common stock of such other party to the merger or other business combination having a current value of twice the exercise price of the Right.

The Rights are generally redeemable, for $0.01 per Right, subject to adjustment, at the option of the Board of Directors, unless and until the Rights become exercisable. The Rights will expire at the earlier of Jan. 14, 2015, one business day immediately prior to the one year anniversary of the adoption of the Plan, or immediately prior to the earlier of the consummation of the tender offer pursuant to which Apollo will make an offer to purchase all outstanding shares of CEC common equity (the "Equity Tender Offer") and the merger contemplated under the Merger Agreement. The Rights distribution is not taxable to shareholders.

ABOUT: For more than 30 years, CEC Entertainment (NYSE: CEC) has served as the nationally recognized leader in family dining and entertainment and the place Where a Kid can be a Kid®. The company and its franchisees operate a system of 577 Chuck E. Cheese's stores located in 47 states and 10 foreign countries or territories. Currently, 522 locations in the United States and Canada are owned and operated by the company. CEC Entertainment, Inc. and its franchises have the common goal of creating lifelong memories for families through fun, food and play. Each Chuck E. Cheese's features musical and comic robotic entertainment, games, rides and play areas, as well as a variety of dining options including pizza, sandwiches, wings, appetizers, a salad bar and desserts. Committed to providing a fun, safe environment, Chuck E. Cheese's helps protect families through industry-leading programs such as Kid Check®.


Information contained on this page is provided by the company via press release distributed by the company, organization, agency or other "source." Vending Times Inc. and VendingTimes.com make no warranties or representations in connection therewith.


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